Progress 1 Flashcards
An accredited investor must have
net worth >$1m excluding primary residence, or >$200k in gross annual income in each of the last 2 years (or $300k if married)
What are the AUM ranges an IA needs to register with the SEC, SEC or State, or exempt from SEC registration and just needs state registration?
AUM>$110m, register with SEC only
$100m<AUM<$110m, register with state or SEC
AUM<$100m, exempt from SEC registration, register with state
What is the job of a transfer agent?
acts as proxy agent, issues and cancels certificates to reflect changes in ownership, handles lost, destroyed, and stolen certificates
What is the responsibility of the registrar?
Maintains issuer’s ownership register for each issue of securities
What is an institutional investor?
large entities that pool money, assets>$50million
Who enforces MSRB rules?
FINRA or SEC for broker/dealers
Comptroller of the currency, FRB, FDIC for bank dealer violations
How much does FDIC cover?
$250k per depositor per FDIC-insured bank
different from SPIC coverage ($250k cash, up to $500k of cash and street name securities)
When would a client-signed disclosure agreement be required before trade execution?
OTC stock with price<$5 per share (penny stock)
What hours can a customer get a cold call?
between 8am and 9pm local time
What is a blue-sky law?
laws established by the state based on the Uniform Securities Act
When does the DOJ have jurisdiction?
criminal proceeding involving violation of federal securities law
What is the Securities Exchange Act of 1934?
regulates secondary market
SEC utilizing SROs
FRB (Fed Reserve Board) oversight on extension of credit (use of margin) (Reg T)
registration requirements
trading and insider regulations
How to calculate outstanding shares?
issued stock-treasury stock
What is market capitalization, and what is the formula for it?
The value of the company traded on the stock market
outstanding shares x market price per share
What is a warrant? When does it have intrinsic value?
contract giving investor the right to buy or sell at a certain price in a specific time frame
-has intrinsic value when common stock market price is above warrant’s subscription price, and you can buy at subscription price
What is control stock?
securities acquired by control persons (ex: CEO) in the secondary market, control person owns >10% of outstanding shares of a company
What is the conversion ratio for preferred/common stock?
(par value of preferred/conversion price)=#common stock shares
#common stock shares x market price= approximate value that preferred stock should be trading at
What is Rule 144?
unregistered, restricted and control stock are sold under this rule
must submit Form 144 when selling stock
restricted (unregistered): volume limits for affiliate, 6 mo holding period, no volume limits for non-affiliate
control: volume limits, no holding period
When is a convertible bond taxed?
After it is converted and the stock is sold
For corporate and municipal bonds, accrued interest is calculated on a __ day month and a ___ day year
30 ; 360
What is the difference between a Eurodollar Bond, Yankee Bond, and an ADR?
Eurodollar Bond is issued outside of US with principal and interest paid in USD ( not registered with SEC)
Yankee is issued by a foreign entity in the US, also paid in USD,
ADRs (American Depository Receipts) are stocks that represent foreign equities but trade in the US
What security is used for import-export financing?
Bankers Acceptance (BA)
What are maturities of T-notes, T-bonds, and T-bills?
T-bonds: >10 years
T-notes: 2-10 years
T-bills: <1year
What are Repos (Repurchase Agreements)
one party borrows money, with the loan being secured by securities
